The mechanisms by which eukaryotes regulate gene expression are important for understanding many complex biological phenomena including human diseases. Prevention and treatment of such diseases have been and will continue to be improved by basic knowledge of gene regulation, especially because molecular mechanisms of transcriptional initiation are highly conserved in eukaryotic organisms ranging from human to yeast. This proposal will continue to investigate the following basic issues concerning molecular mechanisms of transcriptional regulation and chromatin structure in yeast, by combining molecular genetic, biochemical, functional genomic, and evolutionary approaches. First, we will investigate the molecular mechanisms by which the in vivo pattern of nucleosomes is established. We will a) identify heretofore unknown factors involved in nucleosome depletion at terminators, B) define DNA sequence requirements for nucleosome formation by selecting high affinity sites from randomized 147 bp fragments, C) functionally evaluate and mechanistically elucidate a transcription-based mechanism for statistical positioning of nucleosomes in coding regions, and D) define determinants of nucleosome occupancy and positioning by comparing the nucleosome patterns of genomic DNA from diverse yeast species in S. cerevisiae vs. nucleosome patterns in the endogenous organism. Second, we will use the anchor-away method for rapidly removing proteins from the nucleus to investigate fundamental aspects of Pol II transcriptional initiation and elongation including A) the nature and stability of the preinitiation complex, B) the role of CF1 (a complex involved in 3' end formation and termination) in initiation and elongation, C) the role of FACT and Spt6 in Pol II transcription and possible nucleosome eviction, and D) detailed examination of elongation factors for their functions in vivo. In addition, we will examine E) the unexpected role of histone H1 in transcription, F) the issue of whether Pol II elongation factors travel in a large complex throughout the coding regions, G) and the effect of temperature, growth conditions, and specific transcriptional regulatory proteins on the general relationship between Pol II transcription and RNA half-life. Third, we will use a novel conceptual and experimental approach to distinguish biological function from biological noise that is based on a comparison of physiological responses, RNA and transcription factor binding profiles, and effects of mutations in yeast species of varying evolutionary distance. We will explicitly measure biological noise by making functional measurements of evolutionary irrelevant or random-sequence DNA in yeast. Overall, the proposal will answer fundamental questions and address previously unknown aspects about the highly interlinked processes of Pol II transcription and nucleosome occupancy and positioning, as well as pioneer a new approach about distinguishing biological function from biological noise.